Company to Become 2 Divisions
Teck Resources Ltd. announced on Tuesday its plans to spin off its metals and coal operations into two independent publicly listed companies: Teck Metals Corp and Elk Valley Resources Ltd. Teck Metals will focus on minerals such as copper, while Elk Valley Resources will operate the metallurgical coal assets. The move is likely to draw the attention of some of the world’s biggest mining companies as the industry looks to consolidate amid the energy transition.
The restructuring positions Teck Metals as a takeover target for big mining companies, as the demand for the wiring metal accelerates and a global shortfall looms. BHP Group, Rio Tinto Group, and Glencore Plc are actively looking to grow their copper exposure and have been long-term admirers of Teck’s assets across the Americas.
Teck Resources owns four copper mines in South America and Canada that produced 270,000 metric tons last year. The company expects to double copper output after the second phase of its Quebrada Blanca project in Chile ramps up to full capacity by the end of this year.
However, the new structure post-breakup funnels royalties from a separated coal business to the base metals operations, and there will be a six-year phase-out of a dual-class share structure under which Canada’s Keevil family currently controls the company. Still, Citi analyst Alexander Hacking sees adding Teck Metals as positioning any major miner as a dominant player in base metals. However, he notes that six years can be a long time in equity markets, and a lot could change between now and then.
Teck CEO Jonathan Price stated that M&A is not part of the core strategy for Teck Metals at this point in time. RBC Capital Markets analyst Sam Crittenden believes moving away from the dual-class share structure is a positive but warns that it will take several years, and anyone expecting a more immediate change may be disappointed. The Keevil family, which has long controlled Teck through the majority ownership of Class A shares, will remain in control until the phase-out is complete.
TECK-B Stock Price Forecast & Analysis
The average analyst target price for Teck Resources Limited is CAD 52.97 over the next 12 months, based on the forecasts of 27 analysts. The average analyst rating for Teck Resources Limited is Buy, and Stock Target Advisor’s stock analysis of Teck Resources Limited is Bullish, based on 9 positive signals and 3 negative signals. At the last closing, Teck Resources Limited’s stock price was CAD 59.40. The stock price has changed by +7.03% over the past week, +5.04% over the past month and +31.13% over the last year.
